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Daily analysis 14.04.2015

14 Apr 2015 12:47|Marcin Lipka

The 'Financial Times' reports the Greek preparations for bankruptcy, although the authorities in Athens deny it. The ECB meeting will not be crucial. Focus on the US retail sales for March. The euro below the level of 4.00 for the time being, but the market is 'afraid' of going under before the Monetary Policy Council (RPP) meeting. Anxious moves on EUR/CHF.

Macro data (CET- Central European Time). Survey is supplied by Bloomberg unless otherwise noted.

  • 14.30 CET: The US retails sales data for March (survey: +1.1% m/m, minus petrol and cars +0.6% m/m).

Greece again

There is very little rest from the topic of Greece. Today, the 'Financial Times' reports, quoting one of the members of the government from Athens, that Greece is preparing for bankruptcy if it doesn’t receive the next installment of the loan by the end of April. At the beginning of May, Greece has to make two payments to the International Monetary Fund for almost one billion euro. Allegedly, Athens has run out of money.

The next deadline for the Trispas government to present the plan of reforms is April 24. This is when the euro group meeting is being held and the ministers of finance from the eurozone countries are supposed to make a decision on further financing Greece. However, in the case of failure in reaching the agreement, the most serious threat is the ECB ceasing to provide liquidity to the Greek commercial banks if there are no payments to the IMF. As a result, the whole finance system will stop functioning, what leads to serious disturbances and a necessity to transfer to the country's own currency. The authorities, however, officially denied such a development of the situation.

It is worth noting, nevertheless, that this news might be yet another element of the evasive, negotiations game of Tsipras. A leak to the 'Financial Times' is supposed to both make the news more believable and show the society that the government in power is doing everything it can to negotiate the best conditions possible. However, it is still believed that Greece will settle for the reforms in the preliminary agreement and negotiate the methods of soothing the conditions of the help during the months to come, although without a one-time debt reduction.

ECB and the US retail sales

The tomorrow's ECB meeting should not be a crucial one. Mario Draghi will most probably try to emphasise the quantitative easing as bringing the desired effects. The treasury bonds yield are falling, the cost of financing companies is lower and the business sentiment is improving. However, Draghi will encourage using the period of low money cost for reforms.

Regarding the monetary policy, none of its parameters are expected to change. The market is timidly speculating that due to the improving economic climate in the eurozone, the earlier exiting QE might be suggested. However, chances for such a solution are close to zero. The central bank wouldn't start purchasing the assets and promise to continue doing it until September 2016 only to then suggest exiting this policy after one month for no apparent reason. It would be at the very least peculiar.

Today, it is worth paying attention to the US retail sales data. The readings excluding petrol and cars for the last two months came in negative. It was most probably caused by the weather. However, if the last month turns out to be weak (below +0.5%), then the dollar should significantly weaken. On the other hand, if the reading is high (which is more probable; above +0.6%), it might cause EUR/USD to fall below 1.0500.

The foreign market in a few sentences

The most important event of the day is the retail sales data. Yet another weak reading will increase the speculations about prolonging the period of the zero percent interest rates in the USA and will weaken the dollar. However, a significant rebound after the winter slowdown is far more likely and then EUR/USD could go below 1.0500.

Test of 4.00. Watch the franc

EUR/PLN fell below the level of 4.00 for a moment before noon. The market, as expected, is rather reluctant for stronger movements before the Monetary Policy Council (RPP) meeting as it could increase the probability of the verbal interventions. Moreover, staying above the mentioned level could make Belka and his co-workers less eager to dispose of their 'ammunition'.

The situation on the franc looks quite anxious. CHF/PLN stays below 3.90 but only thanks to the zloty strengthening in relation to the euro. The franc also gained value against the European currency and EUR/CHF fell below the level of 1.0300 for the first time this week. It appears that the wallet capital will aim at testing the parity on the euro-franc, which unfortunately might cause a rapid growth on CHF/PLN at one point. This might push CHF/PLN towards 3.90-95.

Anticipated levels of PLN according to the EUR/USD rate:

Wykres - kurs pary EUR-CHF

Source: Bloomberg. The fall of EUR/CHF means the strengthening of the franc against the euro.

Until tomorrow's RPP meeting, EUR/PLN should maintain at a level of 4.00-4.02. If there is no dramatic news from Greece, then by the end of the week the European currency should fall to 3.95-98 PLN.

Anticipated levels of PLN according to the EUR/USD rate:

Range EUR/USD 1.0550-1.0650 1.0450-1.0550 1.0650-1.0750
Range EUR/PLN 4.0000-4.0400 4.0000-4.0400 4.0000-4.0400
Range USD/PLN 3.7700-3.8100 3.8100-3.8500 3.7300-3.7700
Range CHF/PLN 3.8400-3.8800 3.8400-3.8800 3.8400-3.8800

Anticipated GBP/PLN levels according to the GBP/PLN rate:

Range GBP/USD 1.4650-1.4750 1.4550-1.4650 1.4750-1.4850
Range GBP/PLN 5.5000-5.5400 5.4800-5.5200 5.5200-5.5600


14 Apr 2015 12:47|Marcin Lipka

This commentary is not a recommendation within the meaning of Regulation of the Minister of Finance of 19 October 2005. It has been prepared for information purposes only and should not serve as a basis for making any investment decisions. Neither the author nor the publisher can be held liable for investment decisions made on the basis of information contained in this commentary. Copying or duplicating this report without acknowledgement of the source is prohibited.

See also:

13 Apr 2015 17:20

Afternoon analysis 13.04.2015

13 Apr 2015 13:11

Daily analysis 13.04.2015

10 Apr 2015 18:13

Afternoon analysis 10.04.2015

10 Apr 2015 13:01

Daily analysis 10.04.2015

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